Industry Responds to Business Disruptions

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The Aerospace & Defense industry continues to undergo major business disruptions, and is responding with a mix of creative technology solutions to address them.

This is what A&D senior executives reveal in CSC’s 2011 A&D Market Survey, the 10th annual survey, conducted with Aviation Week & Space Technology magazine.

“The key findings in last year’s survey were that many big programs were undergoing large budget cuts,” says David Howells, CSC’s vice president of Design Services. “Now that the cuts have been made, this year’s findings show that A&D companies are seeking technologies that will help them win new business in aftermarket and maintenance, repair and overhaul (MRO), as well as in emerging markets.”

Some key findings in this year’s survey:

• Performance-based contracts are the new reality
• Global customers demand services be delivered locally, wherever they are needed
• Survival depends on integrating with partners to create efficiencies and access new markets
• Aggressive new competitors are entering the marketplace
• Intellectual property is under assault by sophisticated state-sponsored adversaries.

“These and other challenges are driving the need for significant improvements in program management, engineering and production, supply chain management, sustainment, aftermarket and MRO operations, human capital, cybersecurity and other technology-enabled business solutions,” says Howells.

Mature program management

As the A&D business model has shifted from manufacturing big-end products to also servicing and managing them throughout their lifecycle (aftermarket and MRO services), the days of “ship it and forget it” are a thing of the past.

“Rather than hand off a tank or a plane to a military customer and walk away, a paradigm shift has taken place,” says Howells. “Military customers are keeping assets in production longer. They are looking to A&D companies to provide a complete service. They want ongoing maintenance to keep assets in good order. They want innovations that will improve the assets to better support the warfighter in the field.”

To provide such aftermarket services, A&D companies must keep track of lots of moving parts and maintenance records. This information needs to be synced with engineering and production and other partners across the value chain. This cannot be accomplished without mature program management tools.

Supply chain integration

The relative lack of large new aerospace programs is forcing the search for new opportunities in emerging markets.

“Wealth is being created in new geographies, and customers want A&D companies to grow where they grow,” says Howells. “It doesn’t make sense to provide maintenance overhaul support to a customer in the Far East by shipping all the parts back to a maintenance operation in North Carolina. That customer wants a cost-competitive maintenance operation that is nearby.”

The opportunities for growth in emerging markets mean that new competitors are entering the marketplace. To compete, A&D companies must improve quality, lower costs and reduce delivery time. This means that A&D companies and their partners must integrate their supply chains, so they may collaborate more closely and be more competitive.

“Traditionally, A&D companies and their suppliers have been guarded about sharing information,” says Howells, “but the chase for new business and the intense competition requires them to have clear visibility and transparency across their supply network. This is driving them to embrace supply chain innovations and best practices.”

Security is essential

In the modern era of advanced persistent threats and sophisticated state-sponsored adversaries, most participants reveal that security is becoming extremely important. As A&D companies integrate partners into their supply chain and expand their operations globally, there are increased opportunities for adversaries to strike. All A&D firms are taking aggressive steps to secure their systems and protect their mission critical data and intellectual property.

Though many survey respondents view IT as an overhead challenge that must be managed carefully, they also view technology-enabled business solutions as the key to addressing the current business disruptions. Respondents reveal that IT is a significant business differentiator in design-for-manufacture, product lifecycle management and decisionmaking. It also offers a conduit for innovation and enables knowledge exploitation.

A&D executives recognize how technology-enabled business solutions will help them manage complex systems, work more closely with global partners, improve collaboration and meet a wide range of growing challenges, such as regulatory compliance. IT solutions that deliver business-based outcomes are the key to supporting growth.